Keynote Address
Ninth Caribbean Organization of Supreme Audit Institutions
(CAROSAI) Congress
Monday 18th March, 2013. 8.30 a.m.
Hyatt Regency Hotel, Port-of-Spain
Rhoda Reddock
Thank you for having me here this morning at the Opening Ceremony of
the IX Congress of Caribbean Organization of Supreme Auditing
Institutions: “Collaboration to Promote Best Audit Practices”. On behalf of
myself and the University of the West Indies, St. Augustine Campus, I
would like to bring greetings to you at this opening ceremony and convey
my best wishes for the success of this Congress. I am following in excellent
footsteps as I understand that 25 years ago my colleague Professor Max
Richards at that time Professor of Chemical Engineering and Principal of
the St. Augustine campus gave that keynote address. Today he demits
office as President of the Republic of Trinidad and Tobago.
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I would like to join the Auditor-General in extending a special
welcome to our regional and international participants. I know that you
are here to share experiences and learn from the informative conference
plenaries and presentations but I would hope and in fact encourage you to
make time to experience some T&T culture and indulge in the sites and
tastes that our islands have to offer, especially those of you who are visiting
for the first time. I guarantee that you will not be disappointed. Please
enjoy your stay.
25 years after the establishment and first congress in August 1988,
CAROSAI has returned to its place of birth, Port-of-Spain. Your
establishment since that time has meant that the twenty-two member
institutions would have greater opportunities for collaboration through the
exchange of audit experiences, techniques, training and a chance to
develop and standardize industry practices across the Caribbean region. I
am pleased to have this opportunity to congratulate CAROSAI on its
contribution to the development and enhancement of accountability within
the auditing profession in the region over the past 25 years.
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As you know, I not an auditor by profession. In fact I am a
development sociologist, social historian and gender analyst. I am however
someone who is a proud Caribbean citizen who sees your organization and
this congress as an opportunity to make this region the place where we
would want to grow old want our children to live. I am therefore honoured
to have been invited to speak and hope that whatever I say would be
useful to you.
The Profession of Auditing
Who is an auditor? What is the popular image of an auditor – you
know better than I do – the people who can drive fear into one’s hearts
especially at the end of the financial year, the people whose sanction we
need before we can do other things, the people we love to hate but cannot
do without, or simply the people who sit quietly in the corner counting
figures but who never really bothers anyone. According to the
International Organization for Standardization, an auditor is someone who
collects evidence in order to evaluate how well audit criteria are being
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met.1 More so, it stipulates that they must be objective, impartial,
independent and competent.2 One Ernst and Young presentation in
2011described auditing and auditors alike in the Caribbean as traditionally
lacking independent partner reviews, regulatory oversight, effective
independence guidelines , poor or inconsistent audit quality and threats to
independence, just to name a few. Nevertheless, there has been a reported
change in these areas with an increase in regulatory oversight, and more
robust documentation requirements for Auditors. Additionally, with the
changes to legislation in Trinidad and Tobago and other Caribbean
territories, there has been an increased interest in and attention to the audit
process thanks to institutions such as CAROSAI.3
In today’s society, the range of risk has expanded to include all types
of factors that cannot be classified under the umbrella of finance. However,
although auditing is not limited to the area of finance but rather a range of
areas such as compliance and operational audits, management,
1“About
the Profession.” https://na.theiia.org/about-us/about-ia/pages/about-the-profession.aspx
2http://www.praxiom.com/iso-19011-definitions.htm
“Relationships with Auditors – Best Practice.”
http://www.caa.com.bb/2011_Presentations/Narinesingh%20-%20Relationship%20with%20Auditors%20%20Best%20Practice.pdf
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governance, and information systems audits, laypersons are more aware of
financial audits. This may be due to the prominence of the results of these
types of audits in the news. The broader audit functions however are also
important and need to be brought home to the wider society. Every day
there are reports of corporations, public institutions and banks failing
because of a lack of oversight and internal checks and balances; the
Caribbean has not been immune from the effects of the global economic
downturn.
Auditors today perform their task in a world where corruption,
bribery, theft and tax evasion are prevalent and of grave concern. The
statistics support this observation. In the Transparency International 2012
Annual Corruption Perceptions Index , two thirds of the 176 countries
ranked in the index scored below 50 on a scale of 0 to 100, which means
that they are considered significantly corrupt.4 Closer to home, the
Corruption Perception Index indicated that public sector corruption is at a
high level across the region with Guyana being ranked at number 133 on
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“Transparency International Corruption Perception Index.” http://cpi.transparency.org/cpi2012/results/
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the Index, Trinidad and Tobago at number 80 and Jamaica ranked at
number 83, just to name a few regional territories.5
Within the wider society, laypersons have become increasingly aware
of the need for accountability from big businesses, financial institutions
and governments whose resources are indeed the people’s resources. In
2011, Managing Director of Transparency International, Cobus de Swardt
confirmed this by stating that the global movement for greater
transparency had taken on irresistible momentum, as citizens around the
world demand accountability and transparency from their governments.6
He however added that high-scoring countries showed that over time
efforts to improve transparency can, if sustained, be beneficial to the people
of that country.
Role of the Internal Auditor
The challenge now becomes what can be done to promote
transparency and prevent these disasters from occurring and reoccurring? I
believe that this is where the crucial role of internal auditors should be
5“Transparency
6“Transparency
International Corruption Perception Index.” http://cpi.transparency.org/cpi2012/results/
International Corruption Perception Index.” http://www.transparency.org/cpi2011/press
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emphasised. With the global economic downturn, there has been a shift in
focus to the role and significance of the internal auditor, with the urgent
need for efficient and effective corporate governance, risk management and
compliance systems across boards and organizations.7What ideally is the
role of an internal auditor? Based on the definitions provided by various
authorities on auditing, the core characteristics of an internal auditor
should be an independent and objective advisor who can challenge
current practice within the organization, champion best practices and be
a catalyst for improving the practices of an entity.8 Beyond this, they are
responsible for ensuring that all the procedures, rules and regulations that
govern the operations of the institution are followed in addition to
maintaining an effective internal control system which prevents errors,
fraud and misappropriation.
What struck me was that the word independent or independence
seems to be the recurring theme in all definitions and guidelines for
internal auditors. Standards for the Professional Practice of Internal
7“Institute
of Internal Auditors.” https://na.theiia.org/about-us/about-ia/pages/about-the-profession.aspx
“Internal Auditing All in a Day’s Work.” https://na.theiia.org/about-us/aboutia/Public%20Documents/06262_All_In_A_Days_Work-Rev.pdf
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Auditing presented by the Institute of Internal Auditors define
independence as “freedom from conditions that threaten the ability of the
internal audit activity or the chief audit executive to carry out internal
audit responsibilities in an unbiased manner. “9
I believe that this translates to the fact that in order to effectively
perform these tasks, the internal auditor must above all be allowed to be
independent within the organization in which he or she operates. We
should ask ourselves as a region, whether we have allowed our internal
auditors to be truly independent. Granted that the internal auditor is an
employee of management and is dependent on management for raises and
promotions just like other staff members, what practices are in place to
make that person feel free to do their job? The internal auditor and the
internal auditing process may lack public trust and confidence if overt
measures to protect its independence are not implemented and maintained.
An internal auditor should be able to report to higher level management
9“IIA’s
Standards for the Professional Practice of Internal Auditing.”
http://www.theiia.org/ecm/guidance.cfm?doc_id=124.
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without fear of victimization. What mechanisms can we put in place to
empower and support the internal auditor in this important national duty?
An Empowered Internal Auditor Helps to Maintains Good
Governance
In order to perform their task, internal auditors should feel
empowered to do so. Empowerment is the process of enhancing the ability
of persons to make choices and to transform those choices into desired
actions and outcomes. Empowered people have freedom of choice and
action. The empowered auditor then has the autonomy to ensure that good
governance prevails within the organization in which they function.
It has been echoed the world over that internal auditing is the
keystone of good governance especially during the post global economic
crisis era. Governance has been defined as the process by which
organizations are directed, controlled and held to account. The very motto
of CAROSAI fits into this, “Towards greater accountability”. In their role,
the internal auditor should seek to contribute in a broader sense to the
social and economic development of the society. I believe that internal
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auditors have a responsibility to the people. Through best practices, fuelled
by independence and empowerment, they can help to ensure a
strengthened trust by society and trust from the organizations in which
they serve.
Reports of tragedies which persist because of failing economies often
tend to focus on the fact that through undetected fraudulent activity,
millions of dollars are lost; however, there is a more human side to the
story. People lose their jobs if a company folds and declares bankruptcy,
they lose their savings and entire pension funds from failing banks and
investments. Governments may decrease their budget and as a result may
eliminate many social programmes and benefits. All of this is a result of a
lack of appropriate internal checks and balances which could have worked
to prevent these negative effects before they became messy situations. Here
the internal auditor is most valuable. There is a ripple effect because of the
physical loss, that is, the unavoidable resultant emotional and
psychological trauma. We should think about how this affects elderly
people for example, who are no longer able to work to recover any of the
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money that they have lost. This can be quite stressful and burdensome to
say the least. Internal auditors then become guardians of the public’s
interest and as such have a sacred responsibility to effectively carry out
their tasks.
Training for Auditors
As an educator, I believe that education is key to ensuring that
internal auditors are empowered to conducts audits efficiently and
effectively. Yes they need to know the skills of the trade and I know that all
of you are well-trained exemplars in this field but there may be other skills
that could be added. I suggest that students who are being trained should
also be exposed to courses in psychology, sociology, gender studies,
political science, economics, history, public speaking and oral
communications, in order to give them a broader perspective and wider
understanding in order to maneuver through their tasks.
Auditors need to have the power and confidence to speak up when
this is necessary and to communicate in a language that everyone
understands. They also need to be empowered to speak Truth to Power
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when the evidence necessitates this without fear. What is the role of
CAROSAI in this process?
How can the UWI assist in developing this new Auditor required
by the Region ?
The UWI, as the region’s premier tertiary institution is ready to play
its role in preparing graduates who can fulfill the roles and responsibilities
mentioned. I see the CAROSAI as an organization which seeks to develop
the Caribbean region and so rightly fits into the university’s vision. Part of
the vision of UWI’s Strategic Plan 2012-2017 echoes this sentiment by
committing to develop a University that is deeply rooted in all aspects of
Caribbean development and committed to serving the diverse people of
the region and beyond. This means having “a university that is responsive
to regional and international needs … working productively with all its
stakeholders to be an effective agent for political, social, cultural,
environmental and economic development.” We are also preparing
graduates who can serve within your organization and in related Auditing
positions. The UWI seeks to produce distinctive graduates who are among
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other attributes an “effective communicator with good interpersonal skills
and a graduate who is guided by strong ethical values, both of which are
essential to the auditing profession.
I have briefly shared some thoughts that I believe are important, in
the view of a non-auditor, to the profession of auditing. I thank you for this
opportunity and look forward to collaborating with CAROSAI in the near
future. Congratulations once again for successfully getting to your 25th
anniversary. I do hope that you continue to serve the region with
excellence for many, many more years. I wish you a successful congress.
Thank you for your attention.
Rhoda Reddock,
Professor of Gender, Social Change and Development
Deputy Campus Principal,
The University of the West Indies,
St. Augustine Campus,
Trinidad and Tobago.
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